Calcutta High Court (Appellete Side)
M/S Digvijay Finlease Ltd. And Ors vs State Of West Bengal And Anr on 8 May, 2025
IN THE HIGH COURT AT CALCUTTA
CRIMINAL REVISIONAL JURISDICTION
APPELLATE SIDE
Present:-
HON'BLE JUSTICE CHAITALI CHATTERJEE DAS.
CRR/1049/2011
M/S DIGVIJAY FINLEASE LTD. AND ORS.
VS
STATE OF WEST BENGAL AND ANR.
WITH
CRR/1618/2011
M/S DIGVIJAY FINLEASE LTD. AND ORS.
VS
STATE OF WEST BENGAL AND ANR.
WITH
IA NO: CRAN/1/2011 (OLD No: CRAN/1325/2011),
CRAN/2/2011 ( OLD No. CRAN/2032/2011)
IA NO: CRAN/1/2011(OLD NO: CRAN/1325/2011),
CRAN/2/2011( OLD No: CRAN/2032/2011)
WITH
CRR/1619/2011
M/S DIGVIJAY FINLEASE LTD. AND ORS.
VS
STATE OF WEST BENGAL AND ANR.
IA NO: CRAN/1/2011(OLD No: CRAN/1326/2011),
CRAN/2/2011 (OLD No: CRAN/2033/2011)
IA NO: CRAN/1/2011 (OLD No: CRAN/1326/2011),
CRAN/2/2011 (OLD No: CRAN/2033/2011)
WITH
CRR/1620/2011
M/S DIGVIJAY FINLEASE LTD. AND ORS.
VS
STATE OF WEST BENGAL AND ANR.
IA NO: CRAN/1/2011(OLD No: CRAN/1327/2011),
CRAN/2/2011 (OLD No: CRAN/2031/2011)
IA NO: CRAN/1/2011 (OLD No: CRAN/1327/2011),
CRAN/2/2011 (OLD No: CRAN/2031/2011)
WITH
CRR/1621/2011
M/S DIGVIJAY FINLEASE LTD. AND ORS.
VS
STATE OF WEST BENGAL AND ANR.
IA NO: CRAN/1/2011(OLD No: CRAN/1328/2011),
CRAN/2/2011 (OLD No: CRAN/2036/2011)
IA NO: CRAN/1/2011 (OLD No: CRAN/1328/2011),
Page 1 of 14
CRAN/2/2011 (OLD No: CRAN/2036/2011)
WITH
CRR/1622/2011
M/S DIGVIJAY FINLEASE LTD. AND ORS.
VS
STATE OF WEST BENGAL AND ANR.
IA NO: CRAN/1/2011(OLD No: CRAN/1329/2011),
CRAN/2/2011 (OLD No: CRAN/2030/2011)
IA NO: CRAN/1/2011 (OLD No: CRAN/1329/2011),
CRAN/2/2011 (OLD No: CRAN/2030/2011)
WITH
CRR/1623/2011
M/S DIGVIJAY FINLEASE LTD. AND ORS.
VS
STATE OF WEST BENGAL AND ANR.
IA NO: CRAN/1/2011(OLD No: CRAN/1330/2011),
CRAN/2/2011 (OLD No: CRAN/2035/2011)
IA NO: CRAN/1/2011 (OLD No: CRAN/1330/2011),
CRAN/2/2011 (OLD No: CRAN/2035/2011)
WITH
CRR/1624/2011
M/S DIGVIJAY FINLEASE LTD. AND ORS.
VS
STATE OF WEST BENGAL AND ANR.
IA NO: CRAN/1/2011(OLD No: CRAN/1331/2011),
CRAN/2/2011 (OLD No: CRAN/2037/2011)
IA NO: CRAN/1/2011 (OLD No: CRAN/1331/2011),
CRAN/2/2011 (OLD No: RAN/2037/2011)
For the Petitioners : Mr. Somopriyo Chowdhury, Adv.
Mr. Rajshree Kajaria, Adv.
Last heard on : 02.04.2025
Judgement on : 08.05.2025
CHAITALI CHATTERJEE DAS, J.:-
1. The instant application has been filed under Section 482 of the code of
Criminal Procedure 1973 for quashing of proceedings in case no C-9495 of
2006 pending before the Learned Metropolitan Magistrate 10th court at
Calcutta under Section 193 (6)) read with Section 193 (1) of the Companies
Page 2 of 14
Act 1956 and all orders passed there including the order dated 5th
September 2006.
2. A complaint was lodged by the de-facto complainant being the Deputy
Registrar of Companies Mr. Goutam Mukherjee against the present
petitioners under Section 193(6) of the Companies Act 1956 read with
Section 193(1)of the Act. The De-facto complainant came to know about the
alleged violation on 24.6.2005 after he received the letter from the Regional
Director vide his letter dated 24.6.2005 directing him to launch the
prosecution for such violation .Accordingly the complaint was lodged by
the Inspecting Officer duly authorized by the Central Government under
Section 209 A of the Act.
3. The contravention of the aforesaid provisions as pointed out that in course
of inspection the deficiencies were noticed in the board of director's minute
book recorded on 1st June ,2004 a) unsigned by the Chairman b) the
company did not maintain the minutes in one volume but in three volumes
c) namely back side of each page have been found blank i;e running pages
53 to 88 and 89 to 140 d) White fluid ink separating over following pages on
serial numbers 78 to 92 and 95 respectively e) the place and date has not
been maintained with the chairman 's signature . Those Board of Directors
minutes had been recorded dated 3/6/1998 ,1/6/98 ,6/3/99 and 20/4/99
to 1/6/2004 respectively .And consequently the accused rendered
themselves liable for punishment as provided under section 193 (6) of the
Act.
4. A show cause notice dated 17.11.2005 was issued to all the accused by the
complainant through Registered Post with A/D and the reply to the same
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was given on 31st November, 2005 which according to the de-facto
complainant was not maintainable under the law on examination. It was the
contention of the complainant that he took steps to ascertain the identity
under Section 470 (3) of the Cr.Pc and thus the present petitioners/accused
persons found themselves liable for punishment under Section 143 (6) of the
said Act.
5. The accused persons never intended to file the compounding petition under
Section 621(A) of the Act despite giving opportunity and the complaint was
filed within the period of limitation as under Section 468/469 of the Code of
Criminal Procedure. . He has relied upon a decision reported in (1981) 3
SCC,34 (State of Punjab versus Sarwan Singh) where it was held that 'The
object which the statutes seek to subserve is clearly in consonance with the
concept of fairness of trial as enshrined in Article 21 of the constitution of
India. It is therefore of the utmost importance that any prosecution, whether
by the state or a private complainant must abide by the letter of law or take
the risk of the prosecution failing on the ground of limitation. 'The prosecution
against the respondent being barred by limitation the conviction as also the
sentence of the respondent as also the entire proceedings culminating in the
conviction of the respondent here in become nonest”.
6. The Learned Advocate appearing on behalf of the petitioner argues that
even if a bundle of facts mentioned in the petition of complaint are taken of
their face value and are believed to be true, same do not fulfill the criteria to
make out the essential ingredients to constitute the offence punishable
under Section of the 193 (6) of the Companies Act, 1956. It is the contention
of the Learned Advocate that since Section 193 (6) of the Companies Act
Page 4 of 14
1956 prescribed for a sentence of fine, the period of limitation for taking
cognizance of the said offence would be six months from the date of the
offence in view of the mandatory provision engrafted in Section 468 of the
Code of Criminal Procedure. Furthermore even if the allegations made in the
petition of complaint are taken to be true the alleged violation took place on
1st June, 2004 which came to the knowledge of the complainant Opposite
Party No. 2 on 24th June, 2005 but the petition was filed on 5th September,
2006 that is after a lapse of one year two months from the date of knowledge
of the alleged violation and therefore barred by limitation. Further
submission of the Learned Advocate is that the present petitioner no. 2, 3, 4
are the Directors of the petitioner no 1 company and are not in charge of
and responsible to the conduct of the business. Moreover there is no
averment regarding the roles attributed by the petitioner no 3 and 4 in the
running of the Company and in absence thereof they cannot be prosecuted
for alleged violation as in the case.
7. It is further argued that the most important factor is the petitioner no 3 and
4 were not even the Directors of the petitioner no. 1 Company at the time of
alleged default as they have been appointed as Directors on and from 30th
January ,2004 and 13th August ,2004 respectively. There are no such
specific averments against the above persons and hence vicarious liability
cannot be presumed. The Learned Court fail to apply his judicial mind while
issuing process against the petitioner no 3 and 4 in absence of any specific
averment against them.
8. The Learned Advocate has relied upon the decision of Hon’ble Supreme
Court reported in (2004) 16 SCC (Puja Ravinder Devi Dasani versus
Page 5 of 14
State of Maharashtra and another) in support of his contention regarding
vicarious liability ,where it was observed by the Hon’ble Court’ that merely
arraying a Director of Company as an accused in the complaint and making
bald or cursory statement without attributing any specific role that the
Director is responsible in the conduct of the business ,would not make a case
of vicarious liability against the Director of the Company under Section 141 of
the NI Act’ .Another judgement cited by the Learned Advocate as reported
in (2016) 14 SCC 430 (Securities and Exchange Board of India versus
Gourav Varshney and another where it was held that mere mention of the
statutory provision, namely, Section 12 (1)–(B) of the SEBI Act would not
amount to disclosing to the accused the particulars of the offence of which
they were accused .Further more Section 251 Cr.pc would not remedy the
defect and deficiency in the complaint.
Accordingly prayed for quashing the impugned proceeding.
9. In this case none appeared on behalf of the state respondent and the
Opposite Parties though the administrative notice was issued which was
duly served upon the Opposite Party no 2.
10. Heard the submissions of the Learned Advocate.
The germane of this revisional application rests on the petition of complaint
as lodged before the Learned Chief Metropolitan Magistrate under Section
193(6) of the Companies Act 1956 read with Section 193(1) of the Act on 5th
Day of September, 2006. It transpires that the Opposite Party no. 1
Company was incorporated in the State of Gujrat as Private Limited
Company under the Companies Act 1956 and the Company shifted it’s
Registered office as on 5.11.2001 and at present said office is situated at
Page 6 of 14
21 Strand Road, Calcutta . The petitioner no 2 to 4 were the Directors of the
Company at the relevant point of time when the complaint was lodged.
Pursuant to Section 193 of the Act every Company shall keep the minutes of
proceedings for general meetings and the committee meetings. These
minutes must be kept within 30 days of the meeting and should include a
fair and accurate summary of the proceedings the names of the Directors
present and the names of any directors dissenting from a resolution.
Section 196 specifically addresses the consequences in case of default in
complying with the requirements of section 193. The company and every
officer in default shall be penalized with a fine not exceeding 500 /-.
11. In this case an inspection of the books of account and other records of the
Company was carried out by Inspecting Officer under Section 209 (A) of the
Act and he pointed out the deficiencies of the above provisions in course of
inspection which revealed that inspection the deficiencies were noticed in
the board of director’s minute book recorded on 1st June ,2004 a) unsigned
by the Chairman b) the company did not maintain the minutes in one
volume but in three volumes c) namely back side of each page have been
found blank i;e running pages 53 to 88 and 89 to 140 d) White fluid ink
separating over following pages on serial numbers 78 to 92 and 95
respectively e) the place and date has not been maintained with the
chairman ‘s signature . Those Board of Directors minutes had been recorded
dated 3/6/1998 ,1/6/98 ,6/3/99 and 20/4/99 to 1/6/2004 respectively
.And consequently the accused rendered themselves liable for punishment
as provided under section 193 (6) of the Act.
Page 7 of 14
12. A show cause notice was issued dated 17.11.2005 however according to
the complainant the reply was not according to the relevant provision and
therefore not maintainable under the law on examination. The De-facto
complainant for the alleged violation of the Act prayed for issuance of
summons under Section 193 (6) of the Act to the accused persons and also
to dispense with the personal attendance of the complainant and at the
time of imposing fine the learned Court to direct whole or part there of as
may be deemed fit be applied in or towards payment of cost of this
proceedings under Section 621A of the Act. The complaint was received by
the learned court on 5th day of September 2006 and directed the summons
to be issued upon the present petitioners.
13. Being aggrieved thereby the instant application has been filed under
Section 482 to quash the entire proceeding. The particulars of appointment
of Directors and Manager can be seen from the form as annexed along with
this revisional application at page 23,24,25,26 which reveals that one
Prasant Bangur. The petitioner No 4 was appointed on 13th August 2004 as
a Director of Company and Jagadish Chandra N. Mundra resigned from
Directorship on 13th August, 2004. A Form No. 29 dated 13th August,2004
was submitted before the Registrar of Company with the name of the
present petitioner no 4 pursuant to Section 264/2/ 266 (i) (a) and 266(1)
(b)(iii) of the Company’s Act .
14. On 23rd February, 2004 the Company submitted Form No. 32 wherefrom
the date of appointment of the present petitioner no 3 Gopal Daga as
Director of the Company on 30th January ,2004 is found to be recorded .
Form No. 29 was submitted according to Section 303(2) of the Companies
Page 8 of 14
Act, Form no 29 under Section 264(2)/266 (i) (a) and 266(1) (b)(iii) was
submitted before the Registrar of Companies giving the name of Benu Gopal
Bangur as Director and these documents contains the ROC cash counter
receipt from office of the Registrar of Companies . Therefore, from the above
documents which are the documents filed with the Registrar of companies to
provide information regarding appointment of Directors Etc. and also
changes took place. It is clear that the present petitioner no 3 and 4 were
appointed as director only with effect from 13.08.2004 and 30.01.2004
when they were named as an accused person in the written complaint with
an allegation of the violation of the above provision. No specific date has
been mentioned when the violation took place but from the period
mentioned it appears from 1999-2004. No specific roles attributed by the
Director have been mentioned. So those two persons were not the Director
of the said Company as alleged at the relevant point of time and on the face
of it the complaint is not maintainable against them.
15. The Learned Magistrate did not consider the involvement of these two
persons or the absence of specific allegation against them when their names
have been incorporated in a written complaint. In Securities and Exchange
Board of India versus Gaurav Varshney & Anr. With SEBI vs Pravesh
versnay with Major P.C Thakur vs SEBI on relied upon it was observed by
the Hon’ble Supreme Court that; the liability arises from being in charge of
and responsible for the conduct of the business of the company at the
relevant time when the offence was committed and not on the basis of
merely holding a designation or office in a company may be liable if he
satisfies the main requirement of being in charge of and responsible for the
Page 9 of 14
conduct of business of a company at the relevant time .Liability depends on
the role one plays in the affairs of a company and not on designation or
status. If being a Director or manager or secretary was enough to cast a
criminal liability ,the section would have say so .Instead of every person the
section would have say every director, manager or secretary in a company is
liable etc. The legislature is aware that it is a case of criminal liability which
means serious consequences so far as the person sought to be made liable
is concerned .Therefore only persons who can be said to be connected with
the commission of a crime at the relevant time have been subjected to
action.
16. The conclusion is inevitable that the liability arises on account of conduct,
act or omission on the part of the person and not merely on account of
holding an office or a position in a company .Therefore in order to bring a
case within section 141 of the Act the complaint must disclose the necessary
facts which make a person liable.
17. Therefore the court is to consider whether any specific allegation or
aspersion has been made by the Complainant against the petitioner No. 2.
It is a settled law that the Directors are not responsible for the everyday
business. The Hon’ble Supreme Court in Pooja Ravinder Devadasani (supra)
which pertains to N.I Act observed that there must be specific averments
against the Director showing as to how and in what manner he/she was in
charge of and was responsible for conducting the business of the company
The provision enumerated under Section 193 (6) of the companies Act 1956
inter alia provides that every company shall cause minutes of all
proceedings of every general meeting and of all proceedings of every meeting
Page 10 of 14
of its Board of Directors or every committee of the Board ,to be kept by
making 30 days of the conclusion of every such meeting concerned ,entries
thereof in books kept for that purpose with their pages consecutively
numbered and in default of complying with by the company and every
officer of the company shall be punishable with fine which may extend to
Rs.500/- . Pursuant to section 468 of the code of criminal procedure there is
a bar in taking cognizance after lapse of the period of limitation in some
category of offences and the period of limitation depends on the punishment
prescribed for the offence.
18. In a five Judge Bench in (2014)1 SCC (Cri) 721 in Sarah Mathew vs
Institute of cardio Vascular Diseases after considering a catena of decisions
and few legal Maxim ,held as follows;
‘We hold that for the purpose of computing the period of limitation under
section 468 Cr.Pc the relevant date is the date of filing the complaint or the
date of institution of prosecution and not the date on which the Magistrate
takes the cognizance.”
Section 469 of the code deals with the commencement of the period of
limitation and it has been provided that the period of offence of limitation in
relation to an offender shall commence,-
a) on the date of the offence; or
b) where the commission of offence was not known to the person aggrieved
by the offence or to any police officer ,the first day on which such offence
comes to the knowledge of such person or to any police officer, whichever is
earlier; or
Page 11 of 14
c) where it is not known by whom the offence was committed, the first day
on which the identity of the offender is known to the person aggrieved by the
offence or to the police officer making investigation into the offence,
whichever is earlier.
(2) In computing the said period, the day from which such period is to be
computed shall be excluded.
19. In this case allegedly the violation took place on during 1999-2004which
came to the knowledge on 24th June, 2005 and the complaint was filed on
5th September, 2006 ,so the complaint was filed more than a year after the
date of knowledge and thereby the Learned Magistrate should not have
taken the cognizance without considering this aspect. However issue of
summon is a serious matter and therefore there must be very specific
incriminating materials against the persons against whom the summons are
being issued. As discussed the Petitioner No. 2 and 4 can never be
summoned as they were not the Directors at the relevant point of time which
the Learned Magistrate failed to consider. So let me consider the Further
point taken pertaining to limitation as raised by the petitioner .The offence
came to the knowledge when the Deputy Registrar of the Companies
received a letter from the Regional Director vide his letter dated 24th June
2005 with a direction to launch the prosecution for the aforesaid violation
and the complaint was lodged on 5th Day of September 2006 .In the
complaint itself no reason has been assigned while the reply to show cause
dated 30th November ,2005 of the petitioner was considered as not
maintainable under law on examination, by the de-facto complainant.
Therefore the point of limitation cannot be ignored.
Page 12 of 14
20. It is the settled principal of law that the Learned Magistrate before
issuance of summon which is considered to be a serious one as the person
summoned is to be portrayed as an accused, ought to have applied his
judicial mind instead of mechanically pass the order directing to issue direct
to issue the summons. It has been categorically observed by the Hon’ble
court in several judicial pronouncements that a wide discretion has been
given to grant or refusal of process and it must be judicially exercised. A
person ought not to be dragged into court merely because a complaint has
been filed .If a prima facie case has been made out ,the Magistrate ought to
issue process and it cannot be refused merely because he thinks that it is
unlikely to result in a conviction.’
21. The learned Magistrate failed to apply his mind in this case since the
process was issued against the persons who were not the Director of the
company nor any specific averments were there against them in the
complaint, the issue of limitation was not considered and most importantly
failed to see whether any vicarious liability is involved in this case an
therefore mechanically issued the process. Hence the proceeding is liable to
be quashed.
22. The conclusion is inevitable that the liability arises on account of conduct,
act or omission on the part of the person and not merely on account of
holding an office or a position in a company .Therefore in order to bring a
case within section 141 of the Act the complaint must disclose the necessary
facts which make a person liable.
23. The instant CRR stands allowed. In view of that the connected applications
if any are also disposed of.
Page 13 of 14
24. The entire proceeding pending before the Learned Court of Metropolitan
Magistrate 10th Court being C-9495 is hereby quashed.
25. Let a copy of this order be sent to the Learned Court for information and
taking necessary action.
26. Urgent Photostat copy of this Judgement, if applied for be supplied to the
applicant upon compliance of all formalities.
(CHAITALI CHATTERJEE DAS, J.)
Page 14 of 14
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